India-UK trade pact talks may take longer as key issues remain unresolved: Sources

The conclusion of talks on the proposed free trade agreement (FTA) between India and the UK, along with two other pacts, may take more time as both sides continue to negotiate unresolved issues, sources familiar with the matter said.
According to PTI, the three agreements currently under discussion are the FTA, a bilateral investment treaty (BIT), and a social security agreement officially referred to as the Double Contribution Convention Agreement.
“Certain critical issues are still there. Some more meetings would happen,” one of the sources said, indicating that although substantial progress has been made, some sticking points remain.
Among the unresolved matters are the inclusion of a sunset clause in the investment treaty, the UK’s newly introduced carbon tax, and India’s push for data localisation requirements.
India and the UK were initially preparing to announce the closure of these negotiations during Commerce and Industry Minister Piyush Goyal’s visit to London on April 29. However, last-minute differences delayed the announcement.
During his two-day visit, Goyal held multiple rounds of discussions with UK Secretary of State for Business and Trade Jonathan Reynolds. After concluding his engagements in London, Goyal visited Oslo and Brussels, before returning to London on May 2. He is expected to reach New Delhi on Sunday.
Earlier, Finance Minister Nirmala Sitharaman, during the 13th Ministerial India-UK Economic and Financial Dialogue held on April 9, had expressed optimism about concluding the pact soon while meeting her UK counterpart Rachel Reeves.
The trade negotiations resumed on February 24 this year after an eight-month hiatus. Since their launch on January 13, 2022, 14 rounds of talks have been completed.
FTAs typically involve the reduction or elimination of customs duties on a wide range of traded goods and include provisions to ease services trade and investment rules. India is seeking greater market access for its skilled professionals in the UK, particularly in the IT and healthcare sectors, and duty-free access for a range of goods.
Conversely, the UK is pressing for lower tariffs on exports like scotch whisky, electric vehicles, lamb meat, chocolates, and confectionery. It is also keen to expand access to India’s services sector in areas such as telecommunications, legal, financial services, banking, and insurance.
The agreement under negotiation comprises 26 chapters covering goods, services, investment, and intellectual property rights.
Bilateral trade between India and the UK reached USD 21.34 billion in 2023-24, up from USD 20.36 billion the previous year. Currently, the average duty on Indian goods imported into the UK stands at 4.2 per cent.
According to the Global Trade Research Initiative (GTRI), Indian products like textiles, apparel, footwear, carpets, marine goods, grapes, and mangoes would gain from the pact due to relatively low-to-moderate UK tariffs on these items.